3 Numbers to Watch: DE GDP, UK Retail Sales, US Jobless Claims

Germany's GDP is under the microscope today while UK retail sales will take the pulse of Britain's recovery. In the US, a deferred aftershock from Hurricane Sandy is expected to drive up jobless claims.

Some analysts think that momentum will slow beyond Q3 before a rebound sets in. "For now, the ZEW looks broadly consistent with economic stagnation in Germany," Jennifer McKeown at Capital Economics tells Reuters. "But we think that the economy will slide back into recession next year as the peripheral debt crisis intensifies and business and consumer confidence weaken further."

Yes, recession risk is on the march again, and it threatens Germany. Relativity still counts for something, however. A sluggish expansion in Europe's biggest economy still looks good against the expected 0.2% GDP slump for the euro zone overall. German growth remains the first line of defense against deeper macro troubles, although the notion of defense is set for a downgrade. At this point no one can rule out an outright decline in Germany's GDP in the fourth quarter. Is that a high-probability risk? Today's Q3 update will provide guidance for deciding where we go from here.

UK Retail Sales (09:30 GMT) UK retail sales numbers for October aren't expected to build on September's tidy gain. Forecasters see a small retreat for the monthly comparison after September's 0.6% rise. That's enough to keep debate alive about the depth and resilience of Britain's recent escape from recession.

There's certainly a bit more uncertainty to consider after yesterday's mixed news on UK unemployment. The jobless rate dipped a bit to 7.8% for the three months through October vs. 7.9% previously, but a larger-than-expected jump in the unemployment claimant count for last month suggests that the economy remains vulnerable.

British consumption data will also be filtered through the lens of today's preceding GDP report for Germany. If the euro economy is weakening, as it seems to be, a tepid report on UK retail spending will feed worries that Europe's malaise is drifting across the English Channel. Britain may still be Europe's growth leader among big economies after Germany--or the first if Germany's GDP update disappoints?. But that won't mean much if consumers are less willing to spend because of uncertainty about the strength of the recovery.

US Initial Jobless Claims (13:30 GMT) New filings for unemployment benefits fell 8,000 last week to a seasonally adjusted 355,000, or close to a four-year low. That's a robust signal that growth will roll on in the labor market. But today's weekly claims update faces the double burden of building on last week's progress and providing a convincing update that disarms complaints from some analysts that Hurricane Sandy distorted the previous release.

By that reasoning, today's claims report will provide a clearer measure of newly unemployed workers by counting those who filed a delayed claim due to the storm. The consensus forecast anticipates as much with weekly claims expected to jump sharply to nearly 380,000. But if weather-related payback is coming, that too should be temporary and so any rise may fade next week. The recently published October payrolls report is one clue for thinking optimistically: private-sector jobs growth gained the most last month since February.

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